Your refund belongs to you, both legally and morally. It's a refund of taxes that you paid (and/or credits that Congress intended for you), not anybody else (including any dependents you may be able to claim). The intent of the tax code in giving a head of household a break is to allow for the fact that part of their income is going toward paying to meet the basic needs of additional people, because that meeting of basic needs is something the federal and state governments very much want to happen. You get a bigger refund in virtue of the fact that you pay to support your daughter and grandson, not the mere fact that they exist. Tell her that if she wants your income tax refund, she'll have to reimburse you for the associated income taxes you paid throughout the year in order to get it. 🙂
(If she disputes that you paid the support of her and her son needed for them to qualify as your dependents, that's another matter. If they do qualify as your dependents, then she's got some nerve expecting even more of your money.)
